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A Central Asian country of incredible natural beauty and proud nomadic traditions, Kyrgyzstan was annexed by Russia in 1864; it achieved independence from
the Soviet Union in 1991. Current concerns include: privatization of state-owned enterprises, expansion of democracy and political freedoms, inter-ethnic
relations, and terrorism.
UPDATE January 2002
The Kyrgyz republic is not closely involved with the campaign against terrorism, but is going to be a beneficiary all the same. No longer will its southern
province of Osh be a target for terrorists, as has been the case for several years now, coming via Tajikistan from Afghanistan. Kyrgyzstan is in several
security pacts with its neighbours and Russia to counter terrorism and Islamic militancy, while it is a member of the Shanghai Forum with them and China.
Its own security concerns should be eased, allowing it to concentrate upon its rapid and wide-ranging reform programme. It initiated reform before any
other Central Asian state in the early 1990s, earning President Askar Akayev the plaudits of the West and Lady Thatcher in particular. As a remote nomadic
backwater it is rather remarkable that it should have been so forward-thinking. But then Akayev spent 17 years as a physicist in Leningrad, the traditional
home of reformers even in Soviet days. Akayev like many Kyrgyz, is pro-Russian; and this has helped as first Yeltsin and now Putin have pursued strong
The government has long followed a policy of privatisation so that 68.6% of the economy is now outside the still large state sector. Energy and telecoms
companies are on the block, as are metallurgical and mining works and health resorts and recreational facilities rather resembling Switzerland. Kyrgyzstan
in time could develop a strong tourist industry, for those who like beautiful mountain scenery and exotic ways of living.
The government is aware that it needs to attract not just foreign tourists, but foreign investors. It has approved a draft on setting up a National
Development Corporation to encourage inward investment, with a charter fund of US$21m. The inward flow in 2001 was US$43m, not enough even for a small
republic. The plan is to use shares from the fund as security to attract favourable credits without governmental guarantees. Kyrgyzstan may be remote and
the idea of investing in it an arcane one. But its government is firmly committed to changing this conception of the country abroad.
A welcome initiative to alleviate poverty in the republic was launched in Budapest in November, where US$90m was pledged for this purpose from a variety of
international institutions. Some of it will also be used to stabilise the currency. Foreigners are beginning to take Kyrgyzstan on board.
Tash-Kumyr fully modernised and operating
The director-general of the Naryngidroenergostroy, the Naryn hydroenergy construction, has sent a letter to the Prime Ministe,r Kurmanbek Bakiyev, stating
that the Tash-Kumyr hydroelectric power plant in southern Kyrgyzstan would be operating at its design parameters and full capacity by the beginning of
Kyrgyz President Askar Akayev and the government of the republic had assigned this task to the power plant's management at the time when Kyrgyzstan was
gaining its sovereignty 10 years ago. In total, 1.2bn soms have been spent on building the hydroelectric power station since 1992 and currently the
building of the operational water outlet is now complete. The plant has reached its rated capacity of 450,000 kW of electricity.
Kyrgyzstan sets up National Development Corporation to promote investment
The Kyrgyz government has approved a draft on setting up a National Development Corporation. The chairman of the State Committee for the Management of State
Property, Sadriddin Dzhiyenbekov, told a sitting of the Kyrgyz government that the main purpose of the new organisation was to attract investments. This is
very important, especially now when events in Afghanistan will have a negative impact on the investment attractiveness of our country, Kyrgyz Radio has
Inga Sikorskaya, the Radio Correspondent gave the following details: During the current year about US$43m of direct investment have been attracted to the
country. More was expected, but the situation that is developing in Central Asia Region due to the events in Afghanistan has a negative impact on the inflow
Experts reckon that if the conflict in Afghanistan is settled quickly, then additional investment opportunities will be opened to Asian countries, including
Kyrgyzstan. In the event of a protracted crisis, the attractiveness of the country will be decreased. Investments will be curtailed and their outflow will
Though work is being done in Kyrgyzstan to create a favourable investment climate, Dhiyenbekov thinks that previous system has become outdated. That is why
a new approach on attracting foreign investment has been worked out, one which makes it necessary to set up a powerful structure with resources behind
it. The charter fund of 1bn Kyrgyz soms [approximately US$21m] of the Kyrgyz National Development Corporation will be formed from illiquid state assets,
namely unfinished construction and illiquid packages of shares. The plan is to use the shares as security to attract favourable credits without government
guarantees. Besides this, the corporation will assume the task of settling questions related to the registration of enterprises and issuing of licences.
The idea of setting up the Kyrgyz National Development Corporation was discussed at a session of the Kyrgyz government on 27th November and was supported by
the Kyrgyz prime minister [Kurmanbek Bakiyev].
The corporation's founding documents are currently undergoing registration in the Kyrgyz Ministry of Justice.
Kyrgyzstan to get IMF loan
The International Monetary Fund has finally approved a three-year loan programme for Kyrgyzstan amounting to US$93m, of which US$15m will be allocated
immediately, Interfax News Agency has reported.
The final decision was made after the World Bank management had approved a strategy of rendering assistance to Kyrgyzstan to reduce the poverty level in
that country, reads an IMF press release. The loan programme will finance a Kyrgyz government economic programme for the period up to 2004.
The Kyrgyz economy is expected to grow by 4.5 per cent in 2002 against 5 per cent in 2001, and the inflation rate should be 6 per cent next year as compared
to 7 per cent in 2001.
Kyrgyz privatisation keeps rapid pace
The Kyrgyzstan government has shown a stable policy towards the state-owned companies denationalisation. In particular the level of privatisation as from
the beginning of 2001has reached 68.6 per cent thus proving the government's eagerness to fully realise its policy, New Europe has reported.
When the privatisation of monopolies in the basic sectors of the republic's economy started in 1998, the republic of Kyrgyzstan used to own properties worth
more than 9.5bn soms. The BBC, quoting latest media reports, said that among the facilities subject to privatisation with the attraction of investments
are Kyrgyzenergo - Kyrgyz energy company, Kkyrgyztelecom, the Kyrgyzstan aba Dzholdoru national airline, the Kadamdzhay Antiony Combine, the Kara Balta
ore-mining plant and the Kyryz Chemical Metallurgical Works as well as health resort and recreational facilities.
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